Common Legal Issue Faced By Business Establishment

Date : 07-07-2018 15:50

Business
is any trade, commerce or manufacture carried on by a person. Every business to
carry out its day to day activities needs investment and customers to whom its
output or services are to be sold out in order to make a profit. It is an
economic activity which requires continuous production and distribution of
goods. Business does not exist in isolation; there are many factors which
affects the business establishments. The one which business establishments face
the most is legal issues. They need to keep adapting themselves with the
implementation of the upcoming laws in order to avoid the consequences.

Every
business who wants to establish in India or already operating in India needs to
understand the law and regulatory environment. Some of the legal issues faced
by them are:

1. Entry
Strategy: It is a must requirement for every foreign investor
to carry on business in India. This depends upon the nature of the business, in
which sector is going to carry on its business and other commercial activities.
A foreign investor can establish a company, branch or limited liability
partnership (LLP). For the establishment investor needs to know that there is a
separate legislation of law dealing with company i.e. Companies Act, 2013 and
LLPs are governed by different legislation which is Limited Liability
Partnership Act, 2008. With the coming of the NDA government, a series of
initiatives have been launched to enhance investment in the country in terms of
ease of doing business.

2. Foreign
Investment Policy: In India, it is governed by Foreign
Direct Investment (FDI). The policies issued by FDI should be in consonance
with the rules, regulations, and circulars issued by Reserve Bank of India
which is the Central Bank of India. Some investments require prior approval
from the government and some do not. Few sectors which require approval are
real estate, insurance. With a view to attracting foreign investment in the
country, the NDA government has committed to liberalizing the FDI’s policy.

3. Taxation:
With the coming of the new government, the new tax system was implemented which
is Goods and Services Tax (GST). GST was implemented with the motive to remove
the cascading effect on the economy. It was done to uniform the market i.e. one
nation, one tax, and one market. This has helped India in getting ranked 100th
in 2018 in Ease of Doing Business. All the manufacturers and traders would
benefit from fewer tax filings, transparent rules, and easy bookkeeping. In
long run, it is going to reduce inflation.

4. Employment
Laws: There are central as well as State formulated laws on
labor. Every business needs legally binding contract as per the law. Therefore,
it is advisable to seek professional assistance in the area such as drafting
policies, practice manuals, employment contracts and others related areas also.

5. Intellectual
Property Issues: Small as well as big business owners are
concerned with the intellectual property issues. There have been cases where
big businesses rip the ideas of small businesses and then take steps to get
their own intellectual property rights protection. The advice needs to be taken
from experienced advocates in areas of trademark, patent or copyright.